Republicans and Democrats Unable to Reach Consensus on Stablecoin Legislation

On Thursday, the House Financial Services Committee (HFSC) faced challenges in reaching a consensus on stablecoin legislation, primarily due to disagreements among Democrats regarding the current text of the bill.

Committee Chair Patrick McHenry (R-NC) attributed the delay in progress to the White House’s influence on the bill, suggesting that it was holding up the process. Conversely, Democrats accused Republicans of trying to expedite incomplete legislation without proper deliberation.

The Clarity for Payment Stablecoins Act of 2023 aims to grant the Federal Reserve the authority to set guidelines for stablecoin issuers. Simultaneously, it seeks to uphold the power of state-level regulators for payment stablecoins while also establishing additional requirements.

After 15 months of negotiations, Committee Chair Patrick McHenry expressed optimism, stating that they were very close to achieving a bipartisan agreement, with only a few minor provisions remaining to be resolved.

It was the White House’s unwillingness to compromise that has once again brought negotiations to a halt,” he said. He did not specify which elements of the bill the Biden administration had objected to.

Maxine Waters (D-CA), the ranking member of the agency, accused Patrick McHenry of being too hasty in pushing forward a “deeply flawed” bill that lacked support from both the Treasury Department and Federal Reserve. Federal Reserve Chairman Jerome Powell had previously emphasized the importance of the central bank playing a role in the cryptocurrency industry to ensure credibility in monetary matters.

Waters expressed concerns that the bill would grant states excessive authority to expand the types of reserve assets used to back stablecoins, posing risks to token holders. Additionally, she warned that the bill could potentially enable tech giants to issue their own stablecoins.

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